Okey's Views

Category: Business

Prez M. Buhari – ” … while export-driven economies could benefit from devaluation of their currencies, devaluation will only result in further inflation and hardship for the poor and middle classes in Nigeria’s import-dependent economy.”

I love that the president recognized that devaluing the Naira put unnecessary burden on the average Nigerian. I would have liked it better if he had added that he will get there when he transformed the hitherto import economy to export economy. To say that his administration is committed to achieving that objective or at least laying the foundation for a export economy. Nigeria has a fast growing middle class and 20% of Africa south of the Sahara population which means we have leverage. Durable goods manufacturers who want to d business in Nigeria should invest in manufacturing their products in Nigeria. Nigeria has a large pool of educated cheap labour, there is no reason for the slight by multinationals.

That was the good, now to the ugly, the statement that totally soured everything positive feeling I had for the previous statement and that is:

Prez M. Buhari – “The President reaffirmed his conviction that about a third of petroleum subsidy payments under the previous administration was bogus”

These are not the words one would expect to hear from a president. You don’t speculate, you state facts as you know them. If you think they are bogus, keep that to yourself and quietly investigate to get at the facts then tell the people. Will you come back at a future date to apologize to the Nigerian people and the previous administration if indeed your speculation cannot be proven? Do you think that those you slandered in this statement should sue you for slander or defamation of character if you can’t prove the assertion?

You, Mr Buhari are a president and conventional wisdom dictate that you don’t start off maligning your predecessor especially without facts to back up the claim. You as they say, those who live in glass houses shouldn’t throw stones.

This statement in itself “How weakening currency wanes manufacturers competitiveness” is an oxymoron.

Assembling CKD’s is not manufacturing and entities engaged in this should not have access to any benefit allocated for manufacturers. The Buhari administration and indeed any future administration must hold the line on who can be called a manufacturer and get the support they need to thrive. Nigeria cannot afford the to subsidize foreign manufacturers with it’s hard earned forex.

That said, it is highly disruptive to put these policies in place without preplanning and adequate notice given to these assembly plants to source locally. A weak currency is typically good for the export manufacturers as the products become comparatively cheaper abroad but if the business is strictly an assembly of CKD’s, the benefits of local manufacture is lost.

Buhari administration can provide an out for these group of businesses

1. Require a specific minimum percentage of their product must the exported to pay for their forex requirements. Nigeria cannot afford to keep cuddling foreign manufacturers masquerading as local manufacturers.

2. A product cannot be labeled Made in Nigeria without at least 50% local content to start with and can gradually be raised to 85% over 25yrs, excluding labor.

3. The administration must do everything within its ability to help open up foreign markets for Nigeria value added good and products. The Buhari administration must take advantage of the business opportunities afforded by ECOWAS and must active encourage expansion and greater integration of the zone business activities. That is a task the Buhari admin must must demand from all foreign missions. Their job as liaisons for Nigerians and their businesses must be taken seriously. They are not just cultural attaches, they are salespersons for Nigerians and Nigerian businesses, time the act like it. Maintaining these missions take a considerable investment in foreign exchange and we should therefore make sure the investments are worth it.